IGas Energy Plc (LON:IGAS) now has the green light for its proposed shale gas project at Misson Springs, in Nottinghamshire.
It now has planning permission to drill two exploration wells with a view to confirming the commercial potential of what are believed to be vast untapped gas resources.
IGas shares advanced as much as 25% immediately after the news.
Stephen Bowler, IGas chief executive, said: “At this stage we, as well as other onshore operators around the country, are trying to establish if the significant quantities of gas that we have identified exists in the right formations to be commercially prospective and address the issue of security of supply that we face.
“We now have the consent to develop a hydrocarbon wellsite and drill up to two exploratory hydrocarbon wells (one vertically and one horizontally) to help us better understand the shale gas potential in North Nottinghamshire."
Highlighting the lengthy but now cleared planning application, Bowler added: “It has been a long process and everyone has been extremely thorough.
“We have engaged with the community at every step of the process through a local community liaison group.
“This is important to us given we operate 30 fields across the country and understand how imperative it is to work in co-operation with local residents whilst we work safely and sensitively.”
The IGas boss also told investors that the UK’s energy sector is at a critical juncture, and emphasised his belief that gas from shale resources will play an important role in the future.
“We are at a critical juncture in the future of our energy mix and supply, as we move away from coal towards lower carbon energy sources,” he said.
“We rely significantly on gas in the UK, not just for electricity, but also in heating 8 out of 10 homes and as a raw material in the manufacture of many everyday products, including plastics and clothing.”
UKOOG highlights importance of UK shale
Ken Cronin, of the industry body for onshore operators, said: “UKOOG, the representative body for onshore oil and gas industry, is pleased that Nottinghamshire County Council’s Planning and Licensing Committee has granted planning consent for IGas’ application to develop a hydrocarbon wellsite and drill up to two exploratory wells in Misson Springs, North Nottinghamshire.
“This follows the successful applications for onshore oil and gas developments in North Yorkshire and Lancashire and shows positive momentum towards finding out what natural gas resources we have beneath our feet that can be developed for the good of the whole of the UK. 84% of our homes use gas for heating and by 2035 four fifths of that gas will come from outside the UK – that is why this is important.”
IGas’s plans for Misson Springs
IGas wants to drill two exploratory wells at the Springs Road site in North Nottinghamshire, within the PEDL 140 licence area.
The company - which operates PEDL 140, with a 32% stake alongside Total with 40% - believes the two-well programme will be an important step in understand the shale gas potential in North Nottinghamshire and more widely in the East Midlands and Yorkshire.
It has previously stated that successful wells would “in all likelihood’ lead to a subsequent planning application to flow test a well which would involve hydraulic fracturing.
Unlocking IGas Energy’s shale potential
Last month the company unveiled a new assessment of its shale gas assets, detailing some 11 trillion cubic feet (tcf) of potentially recoverable resources. It marks the portfolio as ‘world class’.
To put it into context, that’s enough to exclusively meet the UK’s entire gas needs for almost four years.
The figure comes from a third-party assessment of the assets, conducted by DeGolyer & MacNaughton (D&M), which estimates there is a Total of 102 tcf of shale gas in place across the IGas projects.
The 11 tcf figure is an estimate of the unrisked prospective resource, which accounts for the likely ‘productive area’ and recovery factor, a risked estimate factoring in presumed geological chance of success amounts to 2.5 tcf.
The new estimates came after D&M assessed the entire IGas UK asset base; D&M also upgraded the group’s conventional oil reserves.
Proved (1P) reserves Totalled 9.39mln barrels oil equivalent (boe) at the end of June 2016, up from 8.31mln, whereas proved and probable (2P) reserves amounted to 13.77mln boe.
Estimated contingent resources, meanwhile, increased to 21.83mln boe in 2016, from 12.67mln barrels in the year before.
IGas noted that the contingent resources include additional barrels within producing and undeveloped fields that can be readily developed with infill drilling and gas monetisation projects.
It added that several gas monetisation ventures are ready, requiring only sales agreements and final investment decisions before they can be advanced.
D&M calculated between US$195mln and US$277mln of future cash flows for IGas’s net reserves – and that’s despite IGas having seven fields that presently have zero reserves due to oil prices that render them uneconomic.